1. Locating cheap property – When looking for cheap property stick to transitioning areas. The good locations are already priced that way and the bad areas you won’t be able to get the comps up when you reappraise it after fixing it up. The transitioning neighborhood on the other hand offer value and potential big profits.
2. Potential Profits – When you look at a house you want to see what no one else can in terms of potential. Rather than just looking at rehabbing costs, look for ways to improve the value in untapped areas. Do any of the sides of the building have open areas to place signs for advertising? Can the lot next store be bought cheap and turned into a driveway for this house? Can the building be rezoned to commercial or be converted into several apartments? These are the type of questions you want to be asking yourself before making an offer to buy a property.
3. Rehab – Final repairs on a rehab ALWAYS cost more than the estimate, sometimes much more. It is important to leave a large cushion for unexpected costs that are discovered during rehabs which will happen, plan appropriately.
4. Selling – Selling a fixed up property is much easier since most people buy a house based only on cosmetic appearance. Always list the house at 10% above the price you actually want to receive since almost all buyers come in about this low when making offers.
Flipping a house is not rocket science. Find a decent neighborhood, fix the problems of the house and add value through untapped avenues and you will have no problem making big money in real estate.
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